AOL, Microsoft lure advertisers with TV-style shows

NEW YORK/LOS ANGELES, April 23 Technology
powerhouses like Microsoft Corp and AOL Inc are
flexing their muscles as storytellers, parading TV network-style
shows before advertisers at an annual digital content showcase
in New York next week.

With an eye on the big bucks such shows can command,
Microsoft will trot out a soccer reality show called "Every
Street United." Sony Corp's digital network Crackle
will serve up Jerry Seinfeld's "Comedians in Cars Getting
Coffee" and AOL is presenting a documentary drama about five New
Yorkers called "Connected."

This is a big shift from the short Web episodes many tech
companies have presented for the last two years at the week-long
"NewFronts" event - modeled after the annual "upfronts" where
broadcast and cable TV channels show their wares to Madison
Avenue.

Yahoo Inc is also looking for longer original
programming it can unveil at the showcase, three people familiar
with those efforts said on condition on of anonymity because the
deals have yet to be finalized.

Yahoo Chief Executive Marissa Mayer said on Yahoo's earnings
call last week that the company plans to make fewer, more
focused investments in original content.

"We are going to see more original content overall and no
doubt everyone is working to package their offerings like TV
because they have their eyes on TV dollars," said Kris Magel,
chief investment officer at Initiative, the media buying
division of Interpublic Group of Cos.

But TV-scaled ad spending is unlikely to flow to online
video commercials that usually run before and during a program,
advertisers and analysts said.

"Online video just doesn't offer nearly the reach that
broadcast does," said David Bank, an analyst with RBC Capital
Markets.

AOL has spent about half a billion dollars over the last
three years on shorter content. On Wednesday, it also inked a
deal with Miramax to stream the independent studio's films on
the AOL network for free, but with ads.

"Internet companies are bucketed into the snackable short
form space," Ran Harnevo, president of AOL Video, said. "But we
are seeing the growth in the consumption of content on big
screens."

At the NewFronts, which starts on April 28, Microsoft will
show longer original shows produced by the company's Xbox
Entertainment Studios that exploit the Internet's strengths.

"The challenge TV has is it's not very effective in being
able to reach a very discrete target audience and measure it and
have more interactive components," said Scott Ferris, general
manager of TV and video advertising for Microsoft. "We have very
engaged, high-quality audiences."

Online series can get messages in front of people who watch
little TV, said Peter Naylor, senior vice president of sales for
Hulu.com. The website, owned by Walt Disney Co, Comcast
Corp and 21st Century Fox, will also pitch
shows to advertisers next week.

"There is a segment of the video universe that is very, very
hard to reach through traditional television," Naylor said.
"Online video is a way to reach those light TV viewers."

But because online viewers have to search for content,
advertisers may end up paying more to reach them than on TV.

The cost per thousand (CPM) for a commercial on a cable
network, for example, might be between $10 to $30, depending on
the show and the demographic, estimates Brian Wieser, a senior
research analyst at Pivotal Research Group. For online video, a
CPM for a comparable demographic could be in the range of $20 to
$40.

"There is a lot of aspiration in the NewFronts initiatives,"
said Wieser. "The reality is traditional TV budgets are intended
for content vehicles that are TV-like. (Content) with short
term, low budgets with unknown or even known talent is unlikely
to capture anything resembling a meaningful TV budget."

Another hurdle is that the money that presenters make from
the NewFronts is not tracked by the Internet Advertising Bureau
which hosts the event.

Ari Bluman, chief digital investment officer of GroupM, the
media buying arm of WPP, notes the TV industry's annual
showcase for advertisers exists because they can only buy so
many commercial spots on TV, whereas this is not an issue
online.

However, it may take some time before online shows become
mainstream enough to draw big ad dollars.

Until then, the NewFronts "is more of a showcase for what's
new and exciting," Bluman said.
(Editing by Ronald Grover and Richard Chang)

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